The Economic Stimulus Act has recently been signed into law.
So, what does this mean for home buyers?
Changes have been made to the Internal Revenue code modifying the previous home buyer credit enacted in October of 2008. The following are the changes that have been made:
- Credit amount has been increased. Originally the credit amount was $7,500 or 10% of the home's purchase price. The amount has now been upped to $8,000 or 10% of the home's purchase price.
- Credit is no longer required to be paid back. The major criticism of the 2008 credit was that it was required to be repaid within 15 years. This has been addressed in the new law so that repayment is now only required when the home is sold within the first 3 years.
- Credit is now allowable for buyers using "revenue bond" funded mortgages. Many state and local entities offer first-time homebuyer mortgage programs that sometimes offer terms more favorable than government or conventional mortgages. Previously those buyers had been prohibited from accepting the credit, however they may now claim it.
- Time to purchase has been extended. The original credit was due to expire on June 30th, 2009. The revision is now extended to November 30th, 2009.
- Credit is refundable. This means that a home buyer who would otherwise owe no tax may still claim this credit and receive it as part of a tax refund.
- Credit is for first-time home buyers only. Unfortunately, it does not cover move up buyers. The good part of it is that it should help to sell the home quicker, if it is priced right, because more first-time home buyers will be out looking.
- Credit is income limited. The legislature did not see fit to modify the terms of this program to allow all homebuyers to benefit. Only those who haven't owned in the past 3 years will benefit.
Finally, there is one area that is still unclear:
- Credit may be retroactively claimed. The prior credit offered the option to claim as if the purchase took place December 31st, 2008 even if it closed in the early parts of 2009. The final bill's language seems to replace this paragraph with something unrelated, which may mean buyers will need to wait until 2010 to claim the credit.
Thanks for this article Brigita. We're going to expand on this tomorrow. It's important home buyers and sellers alike get educated on this stimulus bill as some aspects of it need to be visited before december 1st, 2009. Hope all is going well for your in your market.
Btw: we just put up a small article about horse properties in lancaster. Thought you'd appreciate it since you're specialty is just that. Hope to see you around our blog sometime soon.
Sincerely, Active Castellum
Castellum:
We need to educate the consumers with the right informationso they understand.
Business is picking up. Hope yours is, too.
I'm off to read your article about horse properties.
Brigita